Reid Hoffman still bullish on Facebook, Zynga

LinkedIn co-founder and executive chairman Reid Hoffman was one of Facebook’s early investors, putting down $37,500 when the social network was only valued at $5 million.

So while Hoffman has made out well, investors who came in after the social network went public in May have seethed as they watched Facebook’s stock price drop by more than 50 percent and its market valuation drop to about $40 billion.

“I’m a big believer in Facebook’s long-term position,” Hoffman said. “The real question is how will it play out over the next year or two.”

One big concern is how Facebook will generate revenue from the increasing number of its users who now access the free service from mobile devices. The company is experimenting with mobile advertising formats that remain unproven.

But Hoffman said he believes Facebook executives will figure it out eventually. “That’s an innovation problem that’s actually not that hard to solve,” he said.

Social games maker Zynga is another company suffering from the Wall Street blues. Interviewer Michael Arrington asked Hoffman, who is on Zynga’s board of directors, if CEO Mark Pincus was so anxious about the company’s stock that he was throwing furniture around.

Again, Hoffman believes Zynga is still in good shape for the future because it is the leading social games developer, even though it didn’t diversify its platform fast enough, especially for mobile devices.

“The path forward is relatively straight,” he said.

LinkedIn itself has won praise for a successful IPO, even though initally critics complained that it underpriced its stock.

But it recently ran into a bump when Twitter, as part of a larger effort to put a firm grip on its own platform at the expense of some third-party developers, cut off direct Twitter feeds to LinkedIn.

The development at first seemed to be a blow to LinkedIn, which is trying to increase daily engagement by its users. But Hoffman said it turned into a blessing in disguise for the professional social network.

“LinkedIn is primarily about business,” Hoffman said. “People don’t look at their LinkedIn network updates for a “Yay, 49ers,” or a “Love the fish,” he said. “From a LinkedIn perspective, it improved the product.”